Announcement

FLLYR: BGP: Full Year Results Announcement 01:37p.m. 
BGP  
16/03/2020 13:37  
FLLYR  
PRICE SENSITIVE  
REL: 1337 HRS Briscoe Group Limited  
 
FLLYR: BGP: Full Year Results Announcement  
 
BRISCOE GROUP LIMITED  
Results for announcement to the market  
Reporting Period: Full-Year 28 January 2019 to 26 January 2020  
Previous Reporting Period: Full-Year 29 January 2018 to 27 January 2019  
Currency: New Zealand Dollars  
 
Amount (000s); Percentage change  
 
Total revenue  
$653,017 +3.3%  
 
Net profit  
$62,583 -1.3%  
 
Final Dividend  
Amount per share: $0.12500000  
Imputed amount per share: $0.04861111  
Record date: 23 March 2020  
Payment date: 31 March 2020  
 
Net tangible assets per share  
Current period: $1.3892  
Prior comparable period: $1.2230  
 
Full Year Review  
 
Briscoe Group Limited (NZX/ASX code: BGP)  
 
Highlights for the full year ended 26 January 2020:  
o Total sales $653.0 million, +3.34%  
o Same store sales growth, +2.04%  
o Gross profit $257.5 million, +1.64%  
o Gross profit margin 39.43% vs 40.09% last year  
o Online sales growth, +16.20%  
o Full year NPAT (before NZ IFRS 16 adjustment) $65.0 million, +2.54%  
o Final Dividend 12.5cps, increase from 12.00cps last year, +4.17%  
o Total Dividend 21.0cps, increase from 20.0cps last year, +5.00%  
 
Rod Duke, Group Managing Director, said: "We are pleased to announce record  
sales, an increased final dividend payment and, what would have been, another  
record profit for Briscoe Group except for the accounting adjustment the  
company was required to make in relation to the new leases accounting  
standard (see below). To achieve such results despite the ongoing  
competitiveness and widely reported difficulties faced by many retailers, is  
a commendable result."  
 
The earnings were generated on sales revenue of $653.0 million, an increase  
of 3.34% on the $631.9 million generated for the previous year.  
 
Gross Margin dollars increased 1.64% for the period with gross margin  
percentage decreasing from 40.09% to 39.43%. The decreased gross margin  
percentage reflects the continued intensity of competition across the  
retailing environment.  
 
Rod Duke, said: "As we commented in February, the concentration of sales  
around Black Friday promotions is increasingly influencing the traditional  
steady build through to Christmas. New behaviours in customers continue to  
emerge and we are excited by the strategic initiatives the team is developing  
in response. We operate in highly competitive markets, and while major  
event-based campaigns are critical, customers are also constantly looking for  
more resourceful and new ways to shop with us. This is a demanding time for  
retailers but we also see it as an exciting next phase of our ongoing  
development."  
 
In addition to the competitive trading environment, the full-year reported  
bottom line, as was the case for the half-year, will be impacted by the  
introduction of the new international accounting standard in relation to the  
treatment of leases (NZ IFRS 16). The effect on the Group's income statement  
will be to lower the NPAT in comparison to the NPAT which would have been  
reported under the previous accounting treatment. The impact of this change  
will be $2.4 million and result in a reported NPAT of $62.58 million for the  
year (52 weeks) ending 26 January 2020. It is important to note that the  
impact of NZ IFRS 16 has no cash effect to the Group and is for financial  
reporting purposes only (see tables below for more detail in relation to the  
impacts of the new standard).  
 
The 2019/20 NPAT includes dividends received of $6.8 million from the Group's  
shareholding in Kathmandu Holdings Limited. In addition, $2.7 million was  
received for rights entitlements not exercised as a result of the Group's  
decision to take up only half of its entitlement in relation to Kathmandu's  
capital raising process associated with their acquisition of the Rip Curl  
business. Mr Duke said, "Including the $13.6 million additional investment  
made this year, the total cost of our investment in Kathmandu is now $87.9  
million and represents a 16.3% shareholding. The Board considers the level of  
investment to be at an appropriate level and as the largest single  
shareholder we continue to maintain a close interest in the company."  
 
In addition to the additional investment in Kathmandu, $19.2 million of  
capital investment was made by the Group during the year of which $10.1  
million represents predominantly development of property owned by the Group.  
The balance of capital investment was for the fit-out of new and relocated  
stores, online platform improvements, security system upgrades and  
enhancements to system software and hardware.  
 
Inventories totalled $87.4 million at year-end, $6.4 million higher than the  
$81.0 million reported for last year, predominantly reflecting the impact of  
the three new stores opened by the Group during the year, the increased  
demand for online shopping as well as a higher mix of imported inventory this  
year compared to last year's year-end position.  
 
The store development programme progressed well throughout the year. During  
the first half, following earthquake strengthening works, both the Briscoes  
Homeware and Rebel Sport stores in New Plymouth underwent full  
refurbishments.  
 
Projects continued at pace during the second half of the year lead by the  
completion of the Group's new Support Office at 1 Taylors Road, Auckland with  
the full support team relocated by the end of August. Rod Duke said, "It's a  
brilliant space and wonderful to have the full support team together in one  
location."  
 
In September the existing Briscoes Homeware store at 36 Taylors Road was  
relocated to retail space on the ground floor of the new Support Office  
building. This now allows for a complete rebuild on the existing site for  
which siteworks have recently commenced.  
 
September also saw the opening of a new Rebel Sport store in Newmarket,  
Auckland as part of the exciting new Westfield retail redevelopment. This  
store reflects a contemporary fit-out and design, parts of which will be  
replicated in future new and refurbished Rebel Sport stores.  
 
The opening of new Briscoes Homeware and Rebel Sport stores - including  
online fulfilment centres, in Mt Roskill during October were welcome  
additions to the Group's Auckland network. In addition to these new stores,  
the existing Briscoes Homeware store at Riccarton, in Christchurch was  
relocated to a new site on Riccarton Road and an extension and full  
refurbishment of the Tauranga Briscoes Homeware store was completed.  
 
The Group's online channels continued to experience strong growth finishing  
the year 16% up on the previous year and now represents just over 11% of  
total Group sales. Rod Duke said, "We will continue to focus on our online  
offering while maintaining our proven strategy of adding stores to our  
network as and when we identify opportunities. The rollout of our 'Click and  
Collect' offering will continue in the current year enhancing the way we  
engage with customers across both the online and physical store channels.  
 
"New Zealand retailing remains highly competitive and sensitive to continued  
cost and margin pressures, an unpredictable New Zealand dollar, subdued  
consumer and business confidence as well as the increasing significance of  
the COVID-19 (coronavirus) issue - all of which will make it difficult for  
retailers to maintain margins. However, notwithstanding these headwinds, we  
are confident that we have the right programmes and initiatives in place to  
leverage opportunities to grow the business and deliver the experience and  
value to our customers to ensure that we continue to be the first choice for  
homeware and sporting goods in New Zealand."  
 
Group Chair Dame Rosanne Meo said, "This year's results emphasise the Group's  
ability to perform and deliver improved performance in difficult trading  
conditions. On behalf of the Board, I would like to acknowledge the great  
work done by all staff to maintain Briscoe Group's status as New Zealand's  
top homeware and sporting goods retailer.  
 
In relation to the economic and social impact of the Government's border  
control announcements in the last two days and with the broader economic  
package still outstanding, we are not underestimating the challenges we will  
face as an employer and as a business. It is a complex outlook, but we feel  
that we are as well placed as any retailer to respond to our customers'  
ongoing and changing needs."  
 
Rod Duke this morning announced that in response to the growing economic  
uncertainty surrounding COVID-19 (coronavirus) that he will be taking no  
salary at all through until at least the end of July. He said, "I'm  
particularly proud of how the team is facing the challenge ahead. I met this  
morning with the senior management team who unanimously agreed to a freeze on  
their salary increases for the same period. We continue to monitor the  
situation closely, taking steps to help protect our team and customers and to  
mitigate interruption to our business."  
 
Dame Rosanne announced that the directors have resolved to pay a final  
dividend of 12.5 cents per share (cps). The dividend is fully imputed and,  
when added to the interim dividend of 8.5cps, brings the total dividend for  
the year to 21.0cps, an increase of 5.00% over last year's total dividend of  
20.00cps.  
 
The final dividend will be paid on 31 March 2020. The share register will  
close to determine entitlements to the dividend at 5pm on 23 March 2020.  
 
Monday 16 March 2020  
Contact for enquiries:  
 
Rod Duke  
Group Managing Director  
Tel: + 64 9 815 3737  
End CA:00350004 For:BGP Type:FLLYR Time:2020-03-16 13:37:17  

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